Global Competitiveness: Cheer or Boo?

The World Economic Forum ranked the Philippines 65th among 144 nations in the 2012-2013 Global Competitiveness Report just released. This is up 10 points from the 75th ranking a year ago and up 22 places from the nation’s lowest ranking in 2009.

Do you cheer the progress or boo the standing?

Here’s how the Forum summarizes the Philippines:

“Ranked 65th, the Philippines is one of the countries showing the most improvement in this year’s edition. Indeed, it has advanced 22 places since reaching its lowest mark in 2009. The Philippines makes important strides this year in improving competitiveness—albeit often from a very low base—especially with respect to its public institutions (94th, up 23 places). Trust in politicians has made considerable progress (95th, up 33), although significant room for improvement remains. The perception is that corruption (108th, up 11) and red tape (108, up 18) are finally being addressed decisively, even though they remain pervasive. The macroeconomic environment also exhibits marked improvement (36th, up 18) and represents one of the strongest aspects of the Philippines’ performance, along with the market size pillar (35th). In addition, the financial sector has become more efficient and increasingly supportive of business activity (58th, up 13). Despite these very positive trends, many weaknesses remain to be addressed. The country’s infrastructure is still in a dire state, particularly with respect to sea (120th) and air transport (112th), with little or no progress achieved to date. Furthermore, various market inefficiencies and rigidities continue, most notably in the labor market (103rd).”

There are certainly a lot of caveats in the report. Almost every positive statement has a negative or cautionary “but” attached to it.

And some of the barriers to competitiveness are stuck in a timeless cement, like sea and air infrastructure. Perhaps the current investment being made to upgrade airports will unstick these rankings.

The report certainly gives clear indication of where the Philippines needs to improve.

I view the report with a cheer myself. It confirms this notion I’ve been writing about that President Aquino’s honest-government agenda is meaningful. Tangibly meaningful.

You can bet the Get Real scribes will be busy pounding their keyboards to put a boo on standings without recognizing the ratings are up. Not down. It will be a slick sleight of word, I am sure.

I’d say going up 22 places in three years is pretty damn decent. From 87th to 65th, out of 144?

The going gets tougher from here. You have to start knocking off more competitive nations.

But the way forward to do this is clear:

Get rid of red tape.

Get more skilled people into the labor force.

Get the airports, including cargo terminals and customs processes, up to speed.

Get ports upgraded, including customs processes.

Continue the good works on corruption and financial stability.

I wonder to what extent opening up the Philippines to greater foreign ownership would signal “confident and competitive” to the Forum?

Oh, never mind. That would have to go through the Congress, that inert pile of unethical, inefficient, pork-chasing irrelevancy.

But I digress. Back to the point.

Congratulations to the Executive Branch on this fine achievement. The boss and the Cabinet Secretaries and the Heads of the cluster groups that cut across multiple departments to focus on results.

Comments

The Philippines in this survey got high scores in:Macroeconomic environment and Market Size.In other words, reduced government spending and large population.Because of the large number of criteria used, it is difficult to have a useful sense of the ranking. But as in any competitive scale (especially with regard to business) – it is useful to look at the other countries within the same region. Philippines is still way behind Indonesia, Thailand, Malaysia and of course, Singapore.

It's a cheer for me. But I would agree with Angel here, we need to benchmark our progress with our neighbors, Indonesia, Thailand, Vietnam, and other so-called breakout nations. Some in Pnoy's cabinet would tend to benchmark their achievement to the previous administration, which is ridiculous and only amounts to propaganda. DocB

My point is that the rankings need to be examined closely to see what these really mean. It is a "boo" if we are using it to demonstrate that there is indeed progress in the Philippines. There are factors that are more important in the national interest than business interest. You have been pinpointing the growing population of the country. The ranking of the Philippines in this scale was helped by the population (market size). Reduced government spending also helped since it provided a balanced budget, but the more important question is: Did the government reduce its spending by not doing important things. (infrastructure, education and health, for example) So, it is a "boo".

I should add that where one is positioned on the scale is very important. One needs to account for the differentiating ability of the scale on the low end. An improvement, let's say, from 120 to 90, may look impressive, since this is 30 steps up, but this is simply a mirage. This is similar to a class of students where the lower 50 percentile are really indistinguishable from each other.

Yes, Angel. You make good points. As I understand things, the Aquino Administration withheld spending on a lot of projects for two years because they were not confident of the fiscal disciplines and bidding process. So they firmed processes up. So there were two favorable outcomes: (1) better financial balance sheet, (2) less corrupt spending. Now the spending is being one to pursue stated objectives. For example, airport upgrades and schools.Yes, jumping from a low rank is easier. Why didn't other low-ranked countries jump up if it is so easy?Plus the countries you and Doc B mention as doing better than the Philippines. How long have they been working at it, forthrightly, honestly? Singapore since Lee Kuan Yew took charge in like 1950's or so. In my view, the Philippines has just started working like an honorable, honest, sincere country (in 2010) and the results are remarkable.But fragile.

JoeAm, you are probably not a fan of statistics. In competitive rankings, the 25-75 percentile range is the average – and movement within this range is not as significant as one may think. Inside this range are the countries ranked as 40th to 109th. Unlike the Philippines, both Malaysia and Thailand are outside this range. These countries are in the upper 25th percentile. If the Philippines manages to get out of the 25-75 percentile, that will be the remarkable and real progress. Otherwise, the improvement is really trivial.

You could say we're late-comers, late-bloomers, also-runs, stragglers, but moving… One pundit says we're a breakout nation. Some say that was a left handed compliment. I just hope the sense of being a breakout doesn't mean pimple breakout. DocB

It is also important to note that the weights of each of the pillars in the rankings are dependent on the group the country is assigned. The Philippines in the current rankings is regarded as a country in transition from stage 1 to stage 2. There are 89 countries that are above this classification, where greater weight is placed on Higher Education and Training, Goods Market Efficiency, Labor Market Efficiency, Financial Market Development, Technological Readiness, Market Size, Business Sophistication, and Innovation. Indonesia, Thailand and Malaysia belong to these 89 countries – and these three countries still outranked the Philippines, even with higher standards being applied to Indonesia, Thailand and Malaysia.

To answer your question on whether the jump is really significant, we simply show a different competitive index, the ranking made by the International Institute for Management and Development (IMD). The following correspond to the rank (lower number means higher) of the Philippines on this scale in the past five years:2008 – 402009 – 432010 – 392011 – 412012 – 43There are no jumps in this scale. You can also read further on the differences between the WEF and IMD rankings to understand what the rankings really mean beyond being just numbers.

Angel, I don't know what the statistics get us to. An upward movement is upward, and that is good. If it could have been bigger in three years, what did the Aquino Administration do wrong that held the Philippines back. And what did prior administrations do very very wrong to drive it so low.We have different perspectives on this. Yours is that the Aquino Administration is not so hot. Mine is that the progress is great. You can cram all kinds of statistics into those pre-defined buckets. All I know is that I like the trend and hope it continues. Speculating as to whether more spending in the first two years would have created a bigger jump, or a decline, is fruitless. The decisions were made, the results are in. I simply see that the Aquino "aura", which drives practical purists mad, has had a tangible, practical effect that is hard to deny. And it is positive.

Yes, that is the question, is the improvement real, or will the weight of all the Sotto values that persist drag the nation back.I know nothing about Indonesia, actually. Other than the rain forests are really wet and there are more snakes and scary creatures than in the Philippines.

That's a fascinating topic, for sure. I dug into it a bit a couple of years ago. Their ratings are very intricate and I don't know how they get some of their information. I'll take it up when they next release. I think it will be upward bound, but not too far until extrajudicial murders are handled better. That seems to be a hot button for TI.

This one is a good example of how important statistics is. In 2011, the score of the Philippines (on a scale of 0-10, with 10 as least corrupt) is 2.6, same score as Syria. The Corruption Perception Index is actually reported with a 90% confidence interval (if the World Forum had done this with the global competitiveness ranking, it would be of great help). Anyway, with the confidence interval, you will get an idea of the actual significance of the number. The 90% confidence interval for the Philippines is 2.4 to 3.0. The score of the Philippines is 2.4, with the 90% confidence interval at 1.8-3.4. With this in mind, it becomes obvious that the 2011 score of 2.6 is not really different from the 2010 score of 2.4. And if the change from 2.4 to 2.6 resulted in a jump in the ranking of the Philippines from 134 in 2010 to 129 in 2011, this improvement in ranking is completely meaningless.

Both WEF and IMD are two competitive annual rankings of nations by certain criteria. The WEF (2012-2013) ranking shows the country ranked 65, up from 75 in 2011-2012. The IMD (2012) ranking shows the country ranked at 43, down from 41 in 2011.Both measures use mainly economic pillars and criteria.The Happy Planet Index (HPI) shows the Philippines ranked 25 out of 151 countries. Like the economic indices, it is bettered by two other Asian countries mentioned above, Indonesia (14) and Thailand (20). But it is way ahead of Malaysia (84) and Singapore (90). Vietnam, the fifth Asian country mentioned above, has a WEF rank of 75, below the Philippines, but has one of the highest HPI ranks at 2.Conclusion: the Philippines is a happy-go-lucky country (in spite of a previous essay in this blog).And that is something to cheer about.

I'm reminded of the "C" I got in statistics as an undergraduate and the "B" I got in post-graduate, because the good professor gave nothing less. t-tests and f-tests and chi squares drove me to become a banker, where you simply add up the numbers.

From: Island Jim-e (aka: The Cricket)1. Wonderful numbers, figures, stats, etc., that once again to me that a good CPA can make any numberwork out for the good of the "management"! But theresults tell the tale…and I have to vote a big"hell-no" to this survey painting a romantic pictureof the so-called progress! Note: Dante painted awonderful picture of what HELL was depicted as…ringsor degrees of pain and torture! Question: Do yousuppose that one person stuck in the first ring reallycares about the person stuck in the thrid ring…or caneven bother to tell the difference….fire is fire….a third degree burn is a thrid degree burn–the trick isto be able to survive the treatment and hospital stay!2. "It is elementary my dear JOE AMERICA"…safetyshould come first in the rating scale if we need tomake any meaningful "reality check"…and I hope thatyou will agree with my assessment that on a scale ofone to ten (ten worse) is that the "the philippine factor" is about a 3 approaching the zero (zero beingup to our noses for lack of meaning infastructureprotection from earthquake/volcanic activity and mostof all sea-level/surge issues! As the governmentand rich folks have ignored attending to the safety,security, service, protection of the public good …I hope they have made provision for enough "life-boats"to save their families "face"! At this moment we may be but a "one-breath" away from meeing our doom…andthe oligarchs fiddle while the islands sink into history!chirp!

Id tend to agree with Mr de Dios in appreciating the statistical significance of those movements of the Philippines in the Competitiveness report. But then again, i dont think anybody can manage a more significant movement upwards in a span of three years. So ill stick with a small cheer. I actually brought up the Corruption Index not to discuss the Philippines movement in it, but to discuss my favorite topic at the moment: correlating corruption with the dominant religion in a country.

Statistical "insignificance" I believe is the operative interpretation.You know, "Transparency International, corruption and the Catholic Church" would be a fascinating study. Get it to someone looking for a doctoral dissertation subject.

Nice characterization, Jim-e. I see the painting of Dante's Inferno in my imagination, black and white, creatures screaming. Looks a lot like a normal walk in Manila.Your interpretations are head-on blunt. And highly thought provoking.I'm hoping that in three years, when President Aquino is done, you will have mellowed into a fresh optimist.

From: Island jim-e (aka: The Cricket)1. I trust in the Gallup polls as a morereliable yardstick.2. We should not count on being around to see tomorrow more or less three more years! 3. Some points to ponder: A day late and a dollarshort–(to be shouted-yelled out in the gardens ofstone), a ounce of prevention us still worth a poundof cure-all, I trust a boy scout before any congress-person or public person, lastly, pryor planning preventspiss poor pro-action-mistakes-reactions– but only ifthe planners are qualified and have survivedpast their 75th year!4. I would like to encourage the PREZ to help himselfto another 4 years if it would guarantee reforms we can be proud of and to acknowledge him as a true heroand patriot: The clock is ticking down and the sandsof time do not respect the "finger of fate"!5. Question: What good is it if you identified andcured the disease but the patient did not survivethe "treatment" and is long past dead?chirp!

I think there are no boy scouts in the Philippines. President Aquino comes close in values, I think. I wouldn't mind another four years as long as he keeps his eyes and brain focused on Philippine needs, and not his own personal aims. He should not live for his favorability ratings, but for his accomplishments. I understand his favorability ratings rose back to their record highs last month.

Andrew Lim, correlating the dominant religion with corruption, I think, is a bad hypothesis. I think a better hypothesis is to find a correlation between inequality in education and corruption. If a country has only a handful of elite schools and the masses could only access poor quality schools, it breeds corruption.

@Angel de DiosWhat makes it a bad hypothesis? I've come across several studies from serious academics on this topic, and they all used econometrics. A host of other variables were tested alongside, of course. It's fascinating to me, and there are fascinating theories to explain it,too. Corruption (and Im limiting it to the financial kind- bribes, stealing govt money, etc) of course is complex human behavior which can have several triggers, including the one you are suggesting. What even intrigues me more is when I discuss it with Catholic apologists, the usual answer is to skirt the issue by expanding the definition of corruption (like what Arch Villegas did with contraception) or to cop out by citing free will. But that's what I want to test in the first place- the effectiveness of a religion in helping produce individuals and societies with low levels of corruption, since the familiar refrain of the CBCP is to cite corruption as the main cause of poverty and not overpopulation.

The reason is that the extent of how much religion plays a role in someone's life will be part of the question. Simply because a great majority of the country is baptized in one religion does not mean that the majority is truly practicing that religion. Mass attendance is not required and it is not really a vehicle for social mobility. Religion is not a factor but oftentimes is a tool by the corrupt to deceive others. That is, corrupt individuals corrupt religion, not the other way around.

@Angel de Dios"The reason is that the extent of how much religion plays a role in someone's life will be part of the question. Simply because a great majority of the country is baptized in one religion does not mean that the majority is truly practicing that religion"But isnt that a great test of a religion's effectiveness or lack of it? Of what use is a religion where a large part of its members choose to disobey much of the time, or practice it differently from what its authorities teach? Obviously, corruption is not taught by any major religion, so I will never go into proving that it causes people to become corrupt. But what my current research leads me to is this: Catholicism isn't that effective in producing societies with low levels of corruption or influencing its members into avoiding it. There's something ineffective about it.And the data seems to point in that direction. I enjoy this discussion. With Joe's permission, may we continue it here, or do we need to transfer venue? It's quite rare to have quality dialogues like this. Other media dont have the space or degenerate into nonsense talk.

I think some of the “findings” in this essay and the last one require greater analysis. Some are illogical in the sense of being contradictory and some are counterintuitive. I know that intuition tells us that the world is flat, but it also tells us a great many truths about the world. Einstein intuited his concept of relativity and used mathematics to support his intuition. Years after his death, science proved and is still attempting to prove all the ramifications of his theory.What are the findings that bother me?1. That two economic indices – WEF and IMD – do not agree.2. That certain movements in country rankings are ‘insignificant’ or ‘trivial’ or a ‘mirage’ and, even worse, ‘meaningless’.3. That statistics is an important tool, but some statistical studies are not reliable because they do not use confidence intervals, and that the 25-75 percentile range is average and that the differentiating scale at the low end lends itself to being “indistinguishable”.4. That correlating religion with corruption is a bad hypothesis basically because “corrupt individuals corrupt religion, not the other way around”.5. That the RH Bill is not necessary because the Magna Carta of Women is enough.Before going to look at some of these findings, let me state why these findings bother me:• Items 1 – 3. Seem to negate the feeling and hope that the country is moving forward.• Item 4. Seems to prevent a rational analysis of the impact of religion on culture.• Item 5. Seems to be a call for inaction.One is almost tempted to throw up one’s hands and ask, “Why bother?”I won’t look at the findings in detail, just ask some general questions and make some general statements.If I start with the RH Bill and the Magna Carta for Women, if it is true that the RH Bill is not needed, then why the raucous? Why is the Church so vehemently opposed to it? Why is Sotto going to such great lengths to kill it? I suspect that the Magna Carta does not go far enough. I have read the HOR version of the RH Bill in its entirety, but not the Magna Carta. I scanned both bills for the word “contraceptive” and did not find it in either. I then scanned for the word “artificial”. It was not in the Magna Carta, but it was in the RH Bill.If we next look at the correlation of the Church to corruption, many have traced certain practices of the Church that encourage men to sin:• Infant baptism does not give man awareness and the choice to follow in Christ’s footsteps.• The sacraments of the Eucharist and confession absolve men of their sins and allow them to sin some more after mere recitations of formulaic prayers.Finally to “lies, damn lies and statistics”. My intent in bringing up the Happy Planet Index was to show that statistical studies do not paint an accurate picture of the outside world. They are based on selected criteria that do not and cannot include all of the factors that influence the area under study. It’s not only a case of, say, metric vs. imperial measurements used to measure length and mass, but other metrics as well used to measure natural units such as gravity and electrical charges. To extend the analogy, the WEF and IMD indices are using metrics that measure ‘length’, where one uses a yardstick the other a meter stick. Both cannot measure the impact of the Aquino ‘aura’ on the ‘confidence’ of the people because this is not a matter of ‘length’.The upshot of contradicting statements without an openness to consider their merits leads to sterile discourse. I can understand Joe’s conclusion of sticking to his “survey base of one”. In spite of Jim-e’s visions of Dantean circles of hell where souls are caught in the grip of their everlasting suffering and could not be bothered to piss on a fellow sufferer, the lesson to ponder and to act on is for us not to fall into the Pit. Remember the gates of hell bear the inscription, “Lasciate ogne speranza, voi ch'intrate".

I still say you are a sage: " . . . statistical studies do not paint an accurate picture of the outside world. They are based on selected criteria that do not and cannot include all of the factors that influence the area under study . . .I admit, I am biased. I am tired on people ragging on the Philippines and so I look for little glimpses of light. The Global Competitiveness ranking is a little flicker of bright, so damn the statistics, and we ought to all be helping to make it glow bright and true.

"But isnt that a great test of a religion's effectiveness or lack of it?"What is the point of testing something that is obvious? The devil quotes the Scriptures not for guidance, but for proof. People only listen to what they want to hear. And they read only what they want to see. The majority shape their religion according to their own vision.

When banking regulators are tightening up on banks to prevent a real estate bubble from developing in the current flood of demand for condos and houses, you know that something around here is very very different from a few years ago.

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